In a latest big entry into the Indian real estate market, Ajay Piramal Group has announced a big way to help the real estate sector get out of the financial mess they are into triggered by high leverage and slack demand. In partnership with Ivanhoe Cambridge, the real estate arm of Canada’s second-biggest fund manager CDPQ, the newly created NBFC entity of the Piramal group would be investing a little over Rs 2,250 crore in equity of residential projects in the next one year. They will help the troubled real estate developers through a planned recovery from their financial woes.
“Between us and Ivanhoe Cambridge, the initial fund size is about $330 million which we would be investing within a year’s time in residential equity deals,” Khushru Jijina, MD of Piramal Capital and Housing Finance (PCHF) said.
Ivanhoe Cambridge had earlier announced an investment of $250 million into the project while Piramal’s share was undecided. PCHF is the newly formed entity from the merger of Piramal Finance and Piramal Housing Finance which is likely to get listed in near future.
The group has strategic partnerships with global pension funds such as CPPIB, APG apart from Ivanhoe Cambridge while Piramal Enterprise had earlier joined hands with Bain Capital Credit to enter into distressed asset resolution opportunity.
Piramal group, being one of the largest developer as well as a major financier of real estate projects, had earlier invested in equity of housing projects through its existing Indiareit fund of which currently Rs 4,000 crore is in investment, Jijina said on the sidelines of a conference on real estate organised by Indian Chamber of Commerce.
“In the next three months, we would be announcing some more deals. These investments would be done jointly with developers in buying lands,” he said.
In helping stressed real estate developers get out of their financial woes, Piramal would be bringing strong developers and even funding them to help support those in difficulties.
“We would be playing the role of a marriage maker. Such 4-5 deals have been done by us in the Mumbai market where were stressed developers got married to some of the stronger developers we work with. We have invested in these good developers in taking over those stressed assets. We will do few similar stressed asset deals in the National Capital Region,” Jijina said.
These joint development projects were provided financial support to the tune of Rs 250 crore each.
“It’s not that most of the real estate players are into losses but the problem lies in their cashflows. We are sitting with these troubled developers and helping them manage their long-term cashflows and providing all the support they need,” he said.